3G and BWA Auctions

8/8/2019 3G and BWA Auctions

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3G AND BWA AUCTIONS

Syndicate 3 : Aksh Rai08020541003

Ashima Verma08020541007

Atul Prasad08020541009

Jaspal

08020541021

Rashmi Arya


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3G AUCTIONS

Definition of 3G

Eligibility Conditions for 3G Auctions : GSM, CDMA and others

Revised Price Table of 3G spectrums

3G Spectrum Bands available

Spectrum Usage charges and AGR Roll Out obligations.

Duration of License

BWA AUCTIONS

Eligibility Conditions for BWA Auctions : GSM, CDMA and others (ISPs)

Conditions/clauses Attached with allocation of 3G spectrum

BWA Spectrum Bands available

Revised Price Table of BWA spectrum

OTHER ASPECTS

BSNL 3G Pricing (analysis)

No. of Subscribers (analysis)

Results of 3G auctions overseas and analysis

Applications which are generating revenue overseas in 3G

Capex/Opexrequirement : GSM vs CDMA

Which operators will be eligible and which are ready

Threat to BWA..LTE

RECENT NEWS ARTICLES Opportunity Cost losses


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Definition of 3G 3G systems represent the next step in the evolution of mobile cellular

communication. 2G systems focus on voice communication, while3G systems support increased data communication. They allowhigh speed data transfer of at least 144 kbps, mobile Internetaccess, entertainment, and triple-play converged communicationsservices, and have markedly greater capacity and spectrum

efficiency than 2G systems.


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The Auctions

The Auctions shall be carried out in 4 stages as below:


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Eligibility Conditions for 3G Auctions

Recipients considering submitting applications to pre-qualify for the Auctions

should note the following key points regarding eligibility for the spectrumin 2.1GHz band (3G Spectrum):

Any entity: (i) who holds a UAS/ Cellular Mobile Telephone Service (CMTS) licence;

or (ii) (a) who has previous experience of running 3G telecom services either directly or through a majority-owned subsidiary; and (b) gives an undertaking to obtain UAS licence through a New Entrant Nominee UAS Licensee as per the DoT guidelines before starting telecom operations

can bid for 3G Spectrum (subject to other provisions of the Notice).

For the purpose of Clause (ii)(a), a wholly and directly-owned company shallbe entitled to use the qualifications of its owner.


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contd. (Regarding New Entrants)

Prospective Bidders who do not have a UAS/ CMTS licence (for the 3GAuction) or a UAS/ CMTS/ ISP (category A or category B) licence(for the BWA Auction) (the Prospective New Entrants) shall bepermitted to enter either of the Auctions subject to the provisionsof Section 5.1. However, it is clarified that a Prospective NewEntrant who is pre-qualified or is declared a Successful Bidder shall

not be automatically awarded the UAS licence. Prospective NewEntrants are advised to ensure that they satisfy the conditions forthe award of the UAS licence.

This includes the relevant provisions for making an FDI into thetelecom services sector in India. If the Successful Bidder is aProspective New Entrant, the spectrum shall be assigned to it or toa subsidiary of the Successful Bidder, which acquires a UAS licencein the relevant service areas and where the Successful Bidder has aminimum holding of at least 26% (directly or indirectly) (NewEntrant Nominee UAS Licensee). In such a case, both theSuccessful Bidder and the New Entrant Nominee UAS Licensee shallbe jointly and severally liable for the performance of the bid

obligations.


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.contd. ( New Entrants -Foreign entities)

Foreign entities are permitted to participate in the Auction, subject tothe provisions of Section 5.1. However, it must be noted that theUAS/ CMTS/ ISP licence conditions and the FDI provisions imply thatsuch a foreign entity can operate a telecom service in India onlythrough an Indian subsidiary with no more than 74% foreignshareholding (subject to the approval of the FIPB for the foreign

shareholding in excess of 49%). However interested foreign entitiesare allowed to participate in the Auctions directly, and apply for alicence subsequently.

It must be noted by interested Bidders that FIPB approval isconsequent to security clearances, and under certaincircumstances, could take considerable time. Accordingly, suchBidders are advised to initiate the process of getting approvalsfrom the FIPB at the earliest, as such approvals are available for anintent to invest as well.


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Circle wise 3G Spectrum Reserve Bid Prices


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3G Spectrum Bands available for Auction


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.contd.


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Spectrum Usage Charges A spectrum usage charge (over and above the spectrum acquisition fees) as a

percentage of the AGR shall be payable by the Successful Bidder as per rulesnotified by the Government from time to time. DoT has proposed the following

revised spectrum charges for the 800MHz/ 900MHz/ 1800MHz spectrum (2Gspectrum):


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.contd. The following clarifications are provided with regard to the 3G and BWA spectrum

usage charges:

The new revised slab rates applicable to an operator with 2G spectrum would be

applicable to the 2G + 3G spectrum/ BWA spectrum holder on its total AGR; Stand alone 3G/ BWA operators will pay 3% of AGR which corresponds to the lowest slab

for 2G spectrum;

3G/ BWA spectrum to be allocated based on auction shall not be counted for calculatingthe slab of the total spectrum holding by 2G licensee for levy of spectrum usagecharges;

The spectrum charge shall be payable on total AGR of 2G and 3G and BWA servicestaken together;

There will be moratorium of one year on the payment of annual spectrum charges forthe stand alone 3G/ BWA operator only. However, Moratorium of one year will not beapplicable to the existing licensees.


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AGR For this purpose, the AGR shall be defined as in the relevant licence (UAS/ CMTS/ ISP, as

applicable) governing the operations of the operator. At present, the UAS licence defines AGR as below:

The Gross Revenue shall be inclusive of installation charges, late fees, sale proceeds ofhandsets (or any other terminal equipment etc.), revenue on account of interest, dividend,value added services, supplementary services, access or interconnection charges, roamingcharges, revenue from permissible sharing of infrastructure and any other miscellaneousrevenue, without any set-off for related item of expense, etc.

For the purpose of arriving at the Adjusted Gross Revenue (AGR) the following shall be excluded from the Gross Revenue to arrive at the AGR:

(i) PSTN related call charges (Access Charges) actually paid to other eligible/ entitled telecommunication service providers within India; (ii) Roaming revenues actually passed on to other eligible/ entitled telecommunication service providers; and (iii) Service Tax on provision of service and Sales Tax actually paid to the Government if gross revenue had included as component of Sales Tax and Service Tax.


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Roll-out obligations for 3G Spectrum Metro service area The licensee to whom the spectrum is allocated shall be required to provide service in

at least 90% of the service area, street as well as in-building coverage in the allocatedfrequency, within five years of the Effective Date.

Category A, B and C service areas The licensee to whom the spectrum is allocated shall ensure that at least 50% of the

District Headquarters (DHQ) in the service area will be covered, out of which at least15% of the DHQs should be rural Short Distance Charging Areas (SDCA),

within five years of the Effective Date. Further:

the operator shall also be permitted to cover any other town in a District in lieu of theDHQ;

coverage of a DHQ/ town would mean that at least 90% of the area bounded by theMunicipal limits should get the required street as well as in-building coverage in theallocated frequency;

the DHQ shall be taken as on the Effective Date; the choice of DHQ/ towns to be covered and further expansion beyond 50% DHQ/

towns shall lie with the operator.

The Effective Date shall be the later of the date when the spectrum is allocated and thedate when the UAS licence, if applicable, is granted to the operator.

If the licensee does not achieve its roll out obligations, it shall be allowed a further period ofone ear to do so b makin a a ment of 2.5% of its successful bid amount i.e.


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Duration of 3G License The right to use the spectrum allotted in the 2.1GHz band will be valid for 20

years, unless revoked or surrendered earlier, subject to the operator continuing

to have the UAS/ CMTS licence. In case the UAS/ CMTS licence is cancelled/terminated for any reason, the spectrum shall stand withdrawn forthwith.

If the period of existing UAS/ CMTS licence of a Successful Bidder is expiringbefore the period of expiry of the right to use the 3G Spectrum, its existinglicence shall be extended in the 19th year of its validity, for the period required

to make it coterminous with the 3G Spectrum allocation period by amendinglicence conditions as required, at a price determined by the Government at thetime of extension of licence.


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THANK YOU


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Associated Licensees In addition, the following participation restrictions would apply in case of

Associated Licensees :

For the 3G Auction, Associated Licensees are defined as existing UAS/ CMTS licenseesthat are controlled, directly or indirectly, by a single entity, which also has atleast 26%shareholding in the company (the Common Parent).

In the case of licensees that are listed on recognised stock exchanges, a company of thePromoter group could also qualify as a Common Parent, regardless of the level ofshareholding.

For the purpose of either of the Auctions, Associated Licensees corresponding to a singleCommon Parent shall be required to nominate a single entity (either one of the

Associated Licensees or the Common Parent) which shall be authorised to bid on theirbehalf (Group Bidding Entity).

In case a Group Bidding Entity is declared the Successful Bidder in any service area, andthere is an Associated Licensee corresponding to the Group Bidding Entity in thatservice area, then the Government shall assign the spectrum to that AssociatedLicensee. In such a case, the Group Bidding Entity and the Associated Licensee shallboth be jointly and severally liable for the performance of the bid obligations. In case a

Group Bidding Entity is declared the Successful Bidder in any service area in the 3GAuction, and there is no Associated Licensee corresponding to the Group Bidding Entityin that service area, then the Government shall assign the spectrum to the GroupBidding Entity or one of its Associated Licensees or a wholly-owned subsidiary of theGroup Bidding Entity that acquires a UAS licence in that service area (Nominee UASLicensee).

In case the Nominee UAS Licensee is different from the Group Bidding Entity, the Group

Bidding Entity and the Nominee UAS Licensee shall both be jointly and severally liablefor the performance of the bid obligations.

Documents

3G and BWA Auctions